Insurance commissioner asks all major health plans to delay increases

State Insurance Commissioner Dave Jones has called on all major health insurers to delay scheduled premium rate increases on individual policies until his department reviews them.

Following up on a request Jones sent to Blue Shield of California last week, the commissioner Tuesday asked the leaders of Anthem Blue Cross of California, PacifiCare and Aetna to delay increases for 60 days beyond the date the hikes were due to occur.

Anthem Blue Cross had scheduled two increases in coming months — an average increase of 9.8 percent on April 1 and another on Jan. 1, which the company didn’t specify. The company last raised rates an average of 14 percent in October.

Aetna plans an April 1 average increase of 20.7 percent for a small number of policyholders whose premiums were not raised an average of 18.7 percent in October, a company representative said. The reason for the 2 percent difference is that a new law now bans premium cost differences for men and women.

All three companies said they’re reviewing the commissioner’s request.

Blue Shield is pursuing a series of rate increases that began in October that would raise average premiums by 30 percent on individual policyholders and by more than 50 percent for a quarter of them.

The series involved an average premium increase of 19 percent in October, a 4 percent average increase on Jan. 1 and a 6.5 percent increase set for March 1.

Jones, who was sworn into office a week ago, called on the company last week to delay the January and March increases for 60 days while he reviewed them.

In a statement issued late Friday, Blue Shield Chief Operating Officer Paul Markovich said the company regrets the premium increases, which cover a two-year period. “Unfortunately, the rates reflect what it costs to pay for the medical expenses of those members,” he said.

Even with the hikes, which Markovich said would be the only ones this year, the company expects to lose $10 million to $20 million in 2010 and $20 million to $30 million in 2011.

“We are in discussions with the commissioner about his request,” Markovich said.

In his letter, Markovich detailed factors causing the higher rates. The most expensive drivers in 2010 included a 15 percent increase in hospital costs, 12 percent increase in drug costs, and a 9 percent increase in physician fees, he said.

A state insurance official said Health Net’s 4 percent average increase that occurred Jan. 1 has been reviewed and meets state requirements.

Jones has only limited power over health insurance rates — able to disallow policies only if less than 70 percent of premium revenue is spent on health costs.

A new federal law requires 80 percent of premium revenue from individual policies be spent on health care costs (85 percent for group plans) or consumers receive a rebate.

Insurers have said their rate increases meet state and federal thresholds and blame the increases on rising medical costs, sicker policyholders and healthier people dropping coverage because of the economy.